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# How is maximum allowed risk calculated for trades with a stop-loss and position size?

Risk per trade is calculated using the following formula:

**Risk = (Entry Price – Stop Loss) × Position Size × Contract Size**

Let's break that down:
- **Entry Price** is the price at which you open the trade.
- **Stop Loss** is the price at which the trade automatically closes to prevent further loss.
- **Position Size** is the number of lots or units you're trading.
- **Contract Size** is the standard unit size for the instrument (e.g., 100 for gold/XAUUSD).

This represents your *potential* risk — not your realized loss. A trade that closes in profit can still count as a risk violation if the floating loss at any point exceeded the allowed limit.

**For Instant Funding accounts**, the maximum risk is **1% of the current account balance** across all open trades at any time. This is measured as the combined floating loss (balance minus equity). You can reach the limit with a single position or with multiple consecutive or simultaneous positions — the rule applies to the **combined** exposure, not each trade individually.

**Example (XAUUSD, $5,000 account — 1% max = $50):**
- Trade 1: (4319.21 – 4303.88) × 0.02 × 100 = **$30.66**
- Trade 2: (4318.99 – 4303.88) × 0.02 × 100 = **$30.22**
- Combined risk: $30.66 + $30.22 = **$60.88** → Exceeds the $50 limit → Account breached.

Note: even if your stop loss is set within the 1% limit, the account will be breached if the **floating loss** exceeds 1% at any point — regardless of whether the stop loss is triggered.

Commissions and slippage are also included in the total risk calculation, making the effective risk slightly higher than the stop-loss distance alone would suggest.

The maximum allowed risk per trade depends on your account type:

**Challenge Accounts (Standard 1-Step / 2-Step / 3-Step):** You cannot risk more than your daily drawdown percentage per trade (or combined across all open positions).
* **Three-Step Challenge:** 2% of account balance
* **One-Step Challenge:** 3% of account balance
* **Two-Step Challenge:** 4% of account balance

**Instant Funded Accounts:** The maximum risk per trade is **1%**. All open trades combined must also remain within 1% floating loss at any time.

**OMO Accounts:** The maximum total risk across all open trades must remain **below 2%** at any time.

**BNPL Accounts:** The maximum total risk across all open trades must remain **below 2%** at any time.

> **Note:** If no stop-loss is set, the risk calculation becomes "unlimited" and is taken from the trade's running (floating) loss. It is strongly recommended to always set a stop-loss.